coming up on us farm report. a financial overhaul. we will look a commodity markets. it is a done deal for crop insurance. and the ethanol industry is split when it comes to government incentives. >> u.s. farm report brought to you by chevy and their award winning cars, trucks and crossovers. >> hello welcome to us farm report. i'm in for john phipps. we have got lots to cover over the next 60 minutes beginning on the latest on renewed debate on ethanol tax incentives. not only is the issue stirring debate in washington it is also creating division within the industry itself. also ahead this half hour, up to the minute analysis from our market experts but first let's

get started with the headlines from trishia. >> thank you, al. topping our news, debate is building in washington after the congressional budget office releases a report questioning whether the ethanol industry still needs tax incentives remain viable. a tax credit is set to expire on december 31st unless congress extends it. the report says incentives cost taxpayers $6 billion in fiscal year 2009. the report adds that the renewable fuel standard helps guarantee a market for ethanol. there is a divide. not allowing higher ethanol blends. losing the tax incentive will cost jobs. another group says we are

confident that if a fair around open market ethanol will compete successfully against oil. they are calling for the eventual phase out of government support saying incentives should be put towards building pipelines. sweeping financial regulatory reform is poised to cross the president's desk for his signature much the senate passed the bill that effects everything from debit cards to derivative trading. roger bernard explains its impact on commodity market. >> when it comes to derivatives and agricultural there is a provision in the field that does provide an exemption that should provide to agricultural. those that use derivatives for business purposes. but what will get interesting is whether or not the restrictions and other rules put in place on derivatives affect how others that use them for more speculative purposes. in other words, if they decide it will raise their cost too

much that could lower volatility and that could lower volume and lessen options for use them for business purposes. it could also result in higher costs for those using derivatives. so as we look at this major piece of financial reform legislation that is about to become law it will be key now just as it is on any piece of legislation. just exactly how things are implemented. and that has many people in agricultural know the devil, of course, will be in those details. for the editors of pro farmer. signing standard reinsurance agreements with the 16 companies who handle the crop insurance program. according to the ag department the new sra will save $6 billion over the next ten years by cutting subsidies paid to the company. originally usda was looking for $9 billion in cuts. two thirds of the savings will go towards paying down the federal deficit while much of the rest will be used to fund conservation programs. that's it for the headlines. now back to al for crop watch.

>> crop watch this week begins in north dakota where a powerful storm took a toll on a crop. the farm service agency south of bizmark says they got hits with hail in a powerful storm that spawned 22 tornado warnings across the state. a wheat grower in north east colorado says harvest is underway saying yields are ranging in the 40s and 50s but he is also hearing about 70- bushel yields in the southern part of the state. in york springs pennsylvania producer saying his beans are just about shot. they haven't had rain since mid- june. corn is only 2 feet tall. >> when u.s. farm report returns it is time to talk markets. greg wagner joining me at the agra business desk in just two

minutes. please stay with us. >> round table guest this week. gregg wagner independent commodity analyst from chicago. good news for farmers. the rise in prices. you were talking off camera how much did corn go up? >> it is absolutely astonishing

al. it is rather astonishing the fact that we were looking at -- we had to close the market over a cliff looking toward a price of this. we had contract lows in corn at a bushel. we come out with the june acreage figure and grain stocks number and all of a sudden we are at 4.05 or 4.06. we reached the $4 mark. hit up to 4 .10. in this month we gained 60 cents on the market. almost 70 cents. similar story on wheat. also beans have benefited from it. >> i'm going to enter the conversation here for a minute on baffle of a producer because the producer said it is going up. i knew it was going to go up and i'm going to wait until it gets to be $8. well, you're laughing but some producers think that way.

>> and you told me off camera. sell a little of it. >> well, you think about the fear and energy that gets put into a market. earlier this week we had the worst drought in russia in 38 years. i think by friday the drought was at least 170 years. >> wow. >> and i don't know what that really means. i think we can get pretty dry and still be okay. but the bottom line is we waitedded for these big rallies and boom we finally hit it to where with our group we have got sell signals and all three classes of wheat. we have got cell signals and corn and beans and not only are they more than one day we are like eight or nine days into corner. so when you do this big move where we are taking people's money and running them out of the market. that's the whole idea of these short covering rallies in these big moves is take their money and it is hard to do again as we saw from last january. we weren't able to replicate that rally for a long time. this is the same thing. if you move a buck 50 or 60 in

wheat we are not doing this for a while. this is a chance to sell wheat 6:00 .50 next 6.50. >> technically you can't ignore the technicals in the market so it is essentially fundamentally probably and technically like that right now. you are looking at, okay, we absorbed reduction in supply. so what is going to come next to get another leg up in this? and as far as candidates who propel wheat prices higher you would have to look forward, forward looking and see what kind of weather we have. we are still essentially early in the growing season. it is not a case this crop is made and this is something reminiscent of 1983. where we bottomed, the market bottomed. if you go back and look at your chart. july 4th. we came out of the gate storming norman. came out of the gate and

rallied and did not peak in corn and soybeans. so if there is an element here in macroweather, in other words, that we are transitioning rapidly from the el nino it does not hold well. >> that's the big scare. august. we had beans with wet seed all year. it will be dry when they put pods on. it could be 1.50. >> it would not be very hard. >> even they raised in this last report they raised july 12th they raised the production. vis-a-vis the acreage and -- acreage report and they raised production 35 million bushels.

eatern upeaten up in bushel price. >> it is very volatile. it will continue to be volatile. we will continue to talk about that. different things. i'm going to ask you a question. every producer is asking. how am i going to market to take advantage of what is going on? is there a way that i can lock it in at this higher prices and then if they go up, take advantage, or if i sell it am i going to have to stay there? what's the deal? >> this is the time of year to biopsies. you've buy options. you've got short time value. great time to buy. >> analysts don't agree with me. >> my observation -- >> hold your observation. that's where we are going to

begin when we come back with more u.s. farm report in just a moment.

greg, when we left for the first segment you had a thought you were going to give and i said keep it. and now bring it on. >> okay. i can disclose the thought? >> yes. >> all right. the observation i would make is based on -- this is based on 20

plus years of experience is that the most optimal period of putting on options is roughly three weeks before expiration and that is essentially where you're going to get the most bang for your buck if you are doing options. because a lot of your time premium has eroded. depending upon the volatility. some of the volatility is getting squeezedded out as well. and i could tell stories at some point in time that, in any event, you could find some attractivelyly priced options as opposed to going out and buying soybeans, december corn where you're buying a huge amount and it is costing a lot. >> let me ask you another question then because with these prices going up and they have went up a good bit. when we look out at next year's crop some of those prices are actually looking pretty favourable. is it too early now to start

looking about the next year's crop? 2011 crop and taking some protection on that or should we wait awhile? >> i think what you would want to do is wait on that because i don't know how that will work. they have a lot of those bases pretty weak right now. 10% sales out there. i did last year, year before, i started at 420 each year and ended up being the median price. we spent some time above, some time below. i was happy with it the whole time. i feel the same way about it. we are sitting around 420, 425 for next year's corn so i'm cool with that. i don't want a lot of coverage there because i think prices will go up and so i kind of want to be careful with that and that's why i wouldn't go crazy. probably stay away from the options. pay extra money if i had to. >> i would agree. i think at this point in time same thing reiterate what i mentioned earlier is that the

time premium you are paying is just cost prohibitive and much better suited to do like andy said, cash market. these are -- they are getting to be very attractive prices. like andy said the corn is well above $4. and fact of the matter is historically these are attractive prices. >> let's check this for a section. this is going to be a little bit -- give it some thought because we talked a fair amount off camera about what is happening around the world and i know you really give actually almost a neat picture about the demand around the world. but, suppose our technology that producers are using here in the united states gets adopted and moves forward in some of the countries that do have some land yet to develop. what will that do to us?

are we going to be able to stay ahead of it? >> i think that one of the things going on in china in particular is as they detach from the u.s. dollar because they want to consume more they will try to raise their -- essentially raise their wages 20% in the next 3 to 4 years. kind of their idea. that's going to put more money out there to buy commodities. so to meet the demand from that it will have to come from increased production there and other places. i think our corn yields keep going up and up. they could do themselves a lot of good if they start using some of the stacks that we are using off the field. and their demand i think will keep growing. especially when they did that. i think that's a big deal. >> it takes time to be able to incorporate varieties. takes time to incorporate some of the farming practices. no question. as i mentioned before the only pathway for china to increase

production is through yield. they don't have airable land in which they could farm. it is all taken. it is shrinking. sort of like brazil. there is still plenty of land in the world to cultivate. no question about that. what price will it be put into production. i'm not talking about china. south america. i don't say an increase in global supply will increase the world won't be able to feed them. we will get the supplies. but at what price. >> the opportunity is there for somebody at some point this time. we will be back with more u.s. farm report in just a moment.

u.s. farm report weather. now at a reduced price for 2010. welcome back to u.s. farm report. we are going to look at the drought monitor first of all and it changed almost none at

all since last week. still very, very dry as it has been for quite some time. northwestern great lakes. north east minnesota is dry as well. in portions of louisiana with dry pockets around it. dry area through the east central portion of the united states as well. along the eastern seaboard especially north carolina. some pockets out west. that's pretty good for this time of year. typically we see a little bit more than that. take a look at things as far as the jet stream is concerned. a similar pattern this week to what we have seen the past couple weeks. the jet stream is streaming from west to east bringing occasional bits of cooling here and there but for the most part the lower 48 will be pretty hot as we head through this weekend. next week the way it looks right now. there is as we put into motion you can see the ridge is expected to be around the mid-

atlantic again and to could mean another heat wave as we head through the latter parts of this week into the weekends. little bit of trough starting to show up into the next weekend into the pacific north west. that would be the only place it could be cool as we head through this week. >> day by day you can see on monday we do have a frontal system. still warm behind this front. little bit less warm than in front of it but slightly less muggy as well. so we will still call it fairly warm up across here but muggy to hot everywhere south of this front. slow moving system out west. you can see by wednesday it doesn't move much at all. montana across the northern plains states. with thunderstorms mixed in there as well especially north of that warm front. very hot weather for the central and southern portions of the country. by friday then that system does start to move into the great lakes. another one out in the montana area. those will be the focus areas for showers and thunderstorms. back in our next half hour with the longer range forecast. half hour with

commentary from john phipps. this weekend, john talks about the evolution of communication in farm country. thanks john - >> always considering us farmers to be semiliteral meaning we can read semiliterate. people were not trained at a keyboard. i remember well the choice i had my sophomore year in high school between shop class and typing. the idea of spending two hours a day in a class of mostly girls grossed me out. for some per speckive you need to know at the time i was still singing alto in the course. maybe there were some maturity issues you might say.

anyway the result is when ever i am at my computer here at u.s. farm report an visitors are being shown around i'm a featured display. look at this guy they marvel. only uses two fingers to type. this allows me to have eight installed spares in case of a typical farm accident but contrast my handicap with my son who sat at a keyboard like billy joel at a piano. don't get me started on the two- thumb texting i don't try. the leap in skill sets is we could be hearing more by farmers with key boards and key pads and just maybe these conversations will finally move us past some neutral misunderstandings. >> thank you, john. >> we would like to know what you think. you can send e-mails to info' u.s.farm report.com or call and leave us a voice mail. >> now coming up in our next half hour, lemons grown with love at a california orchard.

stay with us. the second half hour of u.s. farm report is coming right up. coming up on u.s. farm report a california producer squeezes success from her lemon orchard. >> soybeans find new use on college campuses and new rules to improve the safety of breakfast. >> u.s. farm report brought to you by chevy and their award winning cars, trucks and crossovers. >> hello welcome to u.s. farm report. i'm al pell in for john phipps. each and every week on this show we do our best to

highlight the incredible diversity found in american agricultural and today is no exception. from lemon producers in the golden state we will visit operations that are nothing alike but have similar hopes and aspirations. all that is ahead. first now let's get started with the headlines. >> thanks, al. new federal rules designed to reduce the form of salmonella contamination in eggs are now in effect. the food and drug administration predicts the rules will prevent up to 70,000 illnesses a year. large scale producers have to adopt a number of measures to help spread disease. they include refrigeration during transportation and storage. the fed fed says that you can

go online an test the various apes and decide which is your favorite game. dozens of developers and kids develop these tools which choose nutricious. go to appsforhealthy kids to vote. >> now using soybean based toner in its printer cart rajs. cartridges. the development of the toner was funded by soybean checkoff dollars. >> we raise over 8 million acres of soy beans. so it is a great future for our

farmers and the soybean toner coming on board. it will help us use more soybeans. >> there are an estimated 7000 laser printers in use but only 20% can use soy bean based cartridges right now. >> that's it for news. time now for the national forecast from meteorologist mike hoffman. >> as we look at the jet stream again for this coming week it is basically going to be meandering through the northern interior states. >> just a popup afternoon

variety. showers and thunderstorms in the south eastern portions of the country. by wednesday then you can see the ridge starts to build in the eastern half. great lakes into the north east. this could forecast we are looking at towards the latter parts of the week. another heat wave for the lower great lakes. mid-atlantic states and that's something we will be watching. scattered thunderstorms for western plains middle of the week. trough coming back into the west but the ridge does continue out east. hot to muggy. that will be the best chance for showers and thunderstorms. next week then as we look toward the 25th of july through the 31st above normal in most of the country. really near normal in florida and far southeast. far north east. southwest. below normal area. the only one i can fine right now is in the northwestern

portions of california. >> 30 the outlook for temperatures. we won't put one on the map. except the southern plains and far western areas of the country. >> precipitation near normal in most of the corn belt. some tropical. of course it depends on where the tropical storms come in but i'm going above normal for most of the gulf coast and parts of the south eastern seaboard. below normal for much of the west. al? >> the ultimate farm quest series. the world of farming is changing. to learn more tricia sloma... today our ultimate farm quest story >> today our ultimate farm qwest story takes us back to michigan to hear from young farmers. they represent third generation on their farm. leon took over the day-to-day business from his dad.

wes mills reports on the transition. >> when the time came for the family farm to transfer from father to son dick and leon decided to seek help from off the farm. that critical step helped smooth out any wrinkles in the transition process. with a consultant's guidance the two men reallocated financial and management resources. looking back leon credits his dad for their success. >> it worked out very well. had a lot to do with him. >> barryward, ohio state university farm business management specialist says the family sets an outstanding example of how a transition plan should be made and followed. >> they have done a very good job of estate planning and transition planning and those are critical issues for him and his parents. >> ward says they have built a successful farming enterprise. the family also identified some goals they want to work for in

the coming months. >> trying to strengthen his debt to asset ratio. strengthen that whole scenario. to do that we will have to look at the asset portfolio. buildings, equipment. land. and seeing some areas that might be areas where he could make changes. >> it is identifying first enterprises that are maybe a little more profitable and get into the commodity crop. soybeans, wheat on this particular operation. where do we need to spend our time? do we need to raise a little more corn, little more soy beans at the expense of wheat acres? potentially. so that's the thing we are starting to discuss and will think more about. >> reporting for u.s. farm reports. >> next week we will look at the use of technology on their

farm getting advice from a field economist mittsy bauer. spirit of the heart land is next.

when life gives you lemons, make lemonade...it's an old adage that holds special meaning for an >> when life gives you lemons make lemoned aid. a local ordinance to build on

their land a california businesswoman decided to plant lemon trees instead. a decision that has really paid off. tracy sellers from california country pays a visit to lemon lady's orchard. >> slightly less acidic than other varieties. they are known as backyard lemons because they are usually too fragile to ship. so they are not sold commercially. she planted trees in her backyard and hoped to sell a few to friends and neighbors but nearly 80,000 lemons harvested later and the backyard fruit has turned karen's backyard into a full time farming profession. >> you have to love what you are doing in life. you have to be passionate about it, you have to care about it and want to have a quality product. you have to want to deliver a

quality product. something that people are delighted to receive. >> i do all the deliveries. lemon ladies is not very big. this is lemon lady. people think because plural i have a whole bunch of women working here. >> from cleaning, picking, packing to deliverying, karen is the lady of lemon ladies portion. she is a one woman fruit fanatic that will convince anyone why my lemons are the best. >> they make everything taste better. everything that you put my lemon in tastes better because it has a lemon in it. >> as for the name lemon ladies orchard. she had multiple reasons for dedicating her farm to the ladies. reason number 1. because lemon trees are self-pollinating and actually don't need male trees

to reproduce. and reason number 2 because she decided early on to name each tree after a lady that had affected her life for the better. and now it is karen that is affecting other ladies and gentlemen for the better by informing them of a beloved lemon and that includes local chefs who pop by for a visit. >> i adore myers but i also thought they were especially appropriate for me because they are dwarfs. they don't get too big. >> karen's farm continues to grow. she now ships all over the united states and business is booming. the lemon lady's orchard begins and ends with one important lady. and if you haven't tried a myer lemon yet, karen fully intends to change that. >> and you can learn more about this operation by heading online to lemon ladies.com. best f >> dogs may be man's best friend but this is also a crime fighter. a keen pair of eyes is a must.

next week you'll meet some folks who help keep the crystal vision clear. please stay with us. with us.

it's story time again here on u-s farm report...for that, we turn things over to >> story time again on u.s. farm report. for that we turn that over to baxter black. >> some blame the incident on her fuzzy slippers. brenda is a top hand and like a lot of dakota ranch women she is especially good. because of her skill and stamina she and her husband had synchronized within a two-week period. of course, when they bred them they didn't anticipate those two weeks would fall in a period of clear skies and 40 below zero. she checked the lot night and day almost hourly and by the

second week she was a zombie. during one particularly cold night she woke dressed and walked to the corral. anysaid she mounted her horse and said she was still wearing her fuzzy pink slippers. so what her frozen jaw muscles mumbled riding into the heifer lot she found a new baby steaming in the frigid air. brenda slid a loop around the hind legs. mom cow followed. as brenda passed through the gate something went wrong. the feet went to the inside of the post, rope went to the outside snagging it in a perfect v. it stopped the horse. he swivelled in his shoes to the left. snugged the rope up under his tail and threw a fit. brenda pitched and grabbed it at the horn and reared back and pointed her fuzzy clad toes in sort of a mission man

immitating brand germanson. the horse continued to buck. as the 35-foot rope snaked itself free throwing smoke from underneath the horse's tail not unlike an 800-pound marlin and taking the lineback from ernest hemmingway's winding reel. brenda came out to the front and ice and snow and frozen poop she careened into a snowbank. packing themselves with snow. the following fall one of the guilty slippers was found in a coyote den two miles from the house by a pheasant hunter. but there is a story behind this he thought. bound to be. this is baxter black. next week, a cave serves as the backdrop for >> next week a cave serves as a

backdrop for are baxter's visit. when we come back it is time for tractor trails and our country church salute. please stay with us. it was more surreal than anything. you're under fire. you're getting blown up. there's definitely adrenaline. there was the explosion, and i remember just opening my eyes,

and it got both of my legs. i had surgery after surgery, you know, i was on a lot of pain medicine. "what's going to happen next? and how long am i going to be here?" the wounded warrior project dropped off a backpack for me. and it had everything in there that i could possibly have needed at that time. peer visitors, people who have been where i had been before, said, "look, brother, "everything's going to be okay. "three months from now, or four months "from now, a year from now, you'll be fine." that type of thing was an invaluable service. to be honest, i don't know if i would be as well adjusted as i am now if it wasn't for them. to learn more, call... or visit woundedwarriorproject.org. harrison michigan was the site for this week's tract >> michigan the site for this week's tractor sales. we spent some time with the great folks at the 20 lakes

antique gas and steam engine show and found one of a kind john deere. >> have a 1924 poker d. this is 263rd john deere tractor ever built. the first john deere tractor delivered into michigan. it was considered a wheatland tractor and they were used strickly as pulling. they had a lower center of gravity. couldn't go over corner rows or anything. they were not for that. john deere didn't offer pto options at that point in time. strictly a pulling tractor. so what we used basically is plowing, dragging and that would be it. they were really popular on the

belt. and the wheatland tractors were developed basically to turn this onto the great plains. i tried to collect first production tractors. my first tractor -- not my first tractor, my first production tractor was this open one. all fuel tractor. we run just gas today. they would start them on gas. what cas called a three-way valve and start them on gas. get them warmed up. they had to be about 200 degrees they shift them to all fuel. when i bought it, it had an intake an cash rater carborattor. i don't restore tractors, i preserve tractors. >> today's country church salute goes to the grand field lutheran church in cheyenne,

north dakota. celebrating its 125th anniversary. they bought land in 1900 to build a first church. church member gloria says the interior is unique with six different designs made of 10 on the walls and ceilings. the church now has 40 members. thank you, gloria, for sharing this story. and now to kansas where the christian church of burlington is celebrating its 150 years of service. the church was organized in 1860. it was the smallest church in kansas at the time and remember, now, kansas was not admitted to the union until 1861. right after world war i the church voted to construct a new building but it took a couple of years and then in 2002 the congregation decided to build a new building. which is where it is now

located. our thanks to al for sharing with us. as always we wants to learn about your home church as well. salutes can be sent to the address on the screen. stay with us, the mail bag is coming up next. john is out this john is out this week - but the mailbag lives on...this week, a veteran farmer has his say.

john is out this week - but the mailbag lives john is out this week but the mail bag lives on. this week a veteran farmer has

his say. mail bag this week we received a thoughtful comment from a viewer about big farming and my remarks, many remarks in the spring about getting the crops planted. if you can't get it in then it is best letting it go at that because you'll never get it out in the fall no matter how big your equipment is. dad used to call them hog farmers. living beyond their means and it is signed an old dirt farmer in maryland. i have been hyper sensitive to getting the 2010 crop in the ground. last two years and wet may and june in much of the corn belt a lot of us are nervous by the timeliness problem is not due to size of operations. some of the smaller farmers had the worst delays. we have decided our core issue on our farm is drainage and reallocating investment to address this hang up. i have also become convinced that widespread multicounty operations may be facing some

new challenges. anecdotal information suggests they are pouring even more bucks into even larger equipment. this will impact their margins for sure. it is hard not to look cynically at larger competitors and question their business ethics. but the surprising truth for me has been those guys are often some of the best farmers and neighbors around. climate conditions can undo the plans of farmers of all sizes. i don't think smaller farmers will automatically enjoy any particular advantage as wet years make a difference for planning and harvest. >> let us know what you think. for john, trisha, mike, i'm al pell. thank you for watching. we will see you again next week. captions by: caption colorado, llc 800-775-7838 email: comments@captioncolorado.com

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